THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[10:00:00] POPPY HARLOW, CNN ANCHOR: Jessica Schneider is with me again outside the courthouse in Alexandria.

So we're waiting, waiting for these closing statement, closing arguments to be made. What are you expecting today?

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: Well, we're expecting that the prosecution will be reminding the jury of the 10 days of testimony, the 27 witnesses they've heard from. The defense team is a little bit uncertain because, of course, they haven't presented a case. No witnesses, no word from Paul Manafort himself.

What we expect them to do is to argue, as they did outside court yesterday, to say that the prosecutors have not proven all of this evidence beyond a reasonable doubt, namely, that Paul Manafort did not commit these crimes on his own and willfully. Those are the things the prosecution has to prove here.

So I just left the court. We're a little bit delayed here. We were supposed to start at 9:30 this morning. The judge had a sentencing in another case, so now prosecutors and the defense team, they are in the courtroom ready to start their arguments any minute, Poppy.

Each side will have two hours to make their case, their final statements to the jury here. Their arguments before that jury goes in to the deliberations. You know, we're expecting to hear prosecutors remind the jury about Paul Manafort's lavish lifestyle, how he allegedly hid those foreign bank accounts, how he allegedly defrauded banks.

The defense team, we'll see what they say. They might pin a lot of this, as they did in their opening statements, on Rick Gates. The fact that he testified for two and a half days and did admit to embezzling money from Paul Manafort. Of course, he has pleaded guilty to lying to investigators. Perhaps the defense team will seize on that as well.

So we'll all see this unfold over the next four hours. Then the jury will be charged and it will be in the hands of that jury -- Poppy.

HARLOW: Hi. Good morning. So the defense calls no witnesses. The defense attorneys come out and speak to cameras yesterday and say look, the government hasn't done its job, they haven't met their burden of proof. Not unusual necessarily to not present a defense. Right? But how do juries read that?

TOOBIN: Well, I mean, it's important to remember, it's not unusual. It's also very usual for defendants to get convicted. I mean, upwards of 90 percent of defendants in federal court get convicted. It is not an easy thing to defend a case.

Look, take it from someone who predicted Hillary Clinton would win the 2016 election, I don't get the defense in this case.

HARLOW: You don't what's going to -- no.

TOOBIN: No, but I mean this defense -- like what's the defense here? I mean, they have never really articulated why Paul Manafort is not guilty. I mean, Rick Gates, they say he is a terrible person. But most of the false statements that Rick Gates made on paperwork was for the benefit of Paul Manafort. It was not for the benefit of Rick Gates.

HARLOW: Right.

TOOBIN: Also, the tax returns. They were false.

HARLOW: All the documentation.

TOOBIN: It was false. The bank submissions. The bank applications. They were false. And it was all for the benefit of Paul Manafort, not --

HARLOW: And so what's the play then? Paul Manafort doesn't want to go to jail. I mean, is it too late for him to flip? What gives?

TOOBIN: You know what? I have been baffled by this from the very beginning. I don't have a clear explanation. A lot of defendants just can't come to terms with the fact that they're guilty. There's also the possibility that he's playing for a pardon. I mean, the president has made clear that he pardons his friends. He pardons his political allies. But -- or he may just believe this is the way to be a stand-up guy.

HARLOW: He could do, right? These are all federal charges so he'd have the power to pardon him on everything.

TOOBIN: Absolutely. Absolutely. He could pardon him tomorrow.

HARLOW: All right. And we have -- he has not indicated that. I should be very clear.

TOOBIN: No, it's -- HARLOW: The president hasn't. So he didn't take stand at all and

this isn't it. I mean, he's got another trial in like five weeks in D.C.

TOOBIN: Unless something happens, whether there is -- I mean it is possible that he may take a message from this case. If he gets acquitted, I expect he will go to trial and try to beat that case, as well. If he's convicted, I wouldn't be surprised if he tries to reach some sort of resolution in the Washington, D.C. case. But, you know, I've been confused by his defense strategy before.

HARLOW: Just to be very clear and to say it one more time again, this is not a trial about President Trump. This is not a trial about Russia meddling per se, in the campaign. However, Rudy Giuliani, the president's personal attorney, made a connection last night, at least in terms of when the president might decide whether or not he's going to sit down with the special counsel. Here's the exchange last night with Chris Cuomo.

(BEGIN VIDEO CLIP)

CHRIS CUOMO, CNN ANCHOR: Are you any closer to having a deal with Mueller to sit down?

RUDY GIULIANI, PRESIDENT TRUMP'S ATTORNEY: No. Haven't heard from him in a week.

CUOMO: How do you interpret that?

GIULIANI: I think they're waiting for -- I hate to bring up the case. I think they're waiting for the Manafort case. I think they feel if they win, they're going to be empowered.

(END VIDEO CLIP)

CUOMO: What do you think?

TOOBIN: I -- I don't really see one as having much connection to another. I mean this dance --

HARLOW: Would they feel empowered if they get --

TOOBIN: No --

HARLOW: If they get a guilty verdict, even though the allegations aren't tied to his time on the Trump campaign, from a guy who ran the campaign. Would they feel more empowered?

TOOBIN: You know, I think -- you know, we try to psychoanalyze Robert Mueller's staff. I think they're just trying to do their jobs. I don't think one really has much to do with the other. Certainly it would be a huge, crushing disappointment to the Mueller team if they lost this case. I mean, that would be a devastating, devastating blow, and it would certainly have a political cost to them, as well.

If they get a conviction, I don't think it really matters with regard to the Donald Trump interview. Remember, this negotiation over his interview has been going on since late last year.

HARLOW: Eight months.

TOOBIN: They were almost agreed to do an interview on January 27th of this year. So this saga about, you know, back and forth, I mean it sure looks to me like there's going to be no interview, and that raises the question of whether there will be a subpoena, and a big legal fight which may stretch well into next year.

HARLOW: Jeffrey, thank you.

TOOBIN: Sure thing, Poppy Harlow.

HARLOW: See you soon.

Also this morning -- no laughing matter here -- the White House cannot guarantee, their words, can't guarantee, we won't hear a tape with the president using the "N" word. Here's what the White House does say. "The president's attack on ex-White House aide Omarosa Manigault Newman are not racist." Listen to Sarah Sanders.

(BEGIN VIDEO CLIP)

SARAH HUCKABEE SANDERS, WHITE HOUSE PRESS SECRETARY: This has absolutely nothing to do with race and everything to do with the president calling out someone's lack of integrity. He always fights fire with fire.

(END VIDEO CLIP)

HARLOW: Abby Phillip joins me from the White House. "He always fights fire with fire." That is, you know, how Sarah Sanders was defending the president taking to Twitter yesterday, calling a woman he hired, a black woman, his former aide, a dog. And it seemed like her message here was nothing racist about this because he insults everyone.

ABBY PHILLIP, CNN WHITE HOUSE CORRESPONDENT: Pretty much, Poppy. The message is that the president is an equal opportunity insulter, but yet we know based on his tweets just in the last several weeks, his go-to for insulting African-Americans, whether it's LeBron James or Don Lemon or Omarosa is that they are not smart. And he took it even further when he used a term that he actually pretty rarely uses in a direct way to call one of his opponents.

He called her a dog. He didn't say she was like a dog. He said "that dog." And I think that's what really took it across the line and highlighted for some people that this is a White House really struggling with issues of race. They are already defending the president against accusations that perhaps there is an alleged tape of his saying the "N" word during "The Apprentice," and now this.

It is getting bipartisan condemnation. Senator Jeff Flake saying this is unbecoming of a president. And other lawmakers saying it doesn't matter whether she was African-American woman or not, calling any woman or any person a dog is beyond the pale. But this White House not backing down at all. And once again, Sarah Sanders reverting back to this idea that the president reserves the right to insult whoever he wants -- Poppy.

HARLOW: OK. And Abby, before you go, walk us through these tapes. Right? Because we know Omarosa has had these multiple recordings of different conversations, and she's sort of drip, drip, dripping through her book tour here. And people on these tapes that she recorded unknowingly are now speaking out with very different stories than they had before. A lot of credibility issues tied to all the parties.

PHILLIP: This has been a fascinating show of exactly who we can trust here. The White House and their allies have been trying to say that Omarosa is untrustworthy. There are issues with her own credibility, including why she worked for a man who she now describes as racist. But she describes an episode in her book in which during the campaign several Trump officials were on a phone call discussing the possibility of an "N" word tape.

She describes the conversation in detail, including using quotes. Those people on that tape, Lynne Patton and Katrina Pierson, both initially denied that that episode ever happened. They denied that there was a conference call in which they discussed this episode at all. And then Omarosa released the tape. By later that afternoon they both appeared on CNN last night and they totally changed their story. This is what they had to say.

(BEGIN VIDEO CLIP)

KATRINA PIERSON, SENIOR ADVISER, TRUMP 2000 CAMPAIGN: She really was a dog with a bone when it came to this tape. It got to the point to where we had a campaign to run so what you hear in that tape, which is not the tape she's been referencing, is me placating to her which I did a number of times because she would not let this tape go.

LYNNE PATTON, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT ADMINISTRATOR: There were a lot of times that we talked about this tape because Omarosa was literally obsessed with it. She brought it up constantly. It's clear now that the reason why she did was because she was surreptitiously recording us.

(END VIDEO CLIP)

PHILLIP: So, first, those conversations never happened, and now they did happen but they happened because of Omarosa. It's all coming down to who can you believe here. Is it the former White House staffer who's turned on her boss, or the current Trump allies who are lying about what happened?

[10:10:02] It's I think perhaps going to come down to what is recorded on tapes and what we can see and hear with our own ears -- Poppy.

HARLOW: Thank you for trying to keep it straight for all of us this morning, Abby.

All right. So still to come for us, the White House press secretary Sarah Sanders is apologizing this morning for saying that President Trump created many more jobs for African-Americans than President Obama. That is simply not true.

Also, a big night for diversity and a big night for the president. We're going to break down a history making primary day.

Plus, hundreds of firefighters, police officers and volunteers swarming the site of a deadly bridge collapse in Italy this morning in a frantic search for any survivors. We will update you.

(COMMERCIAL BREAK)

[10:15:04] HARLOW: Welcome back. "I'm sorry for the mistake." Those are the words from Press Secretary Sarah Sanders after she made a blatantly false statement about African-American employment at the podium yesterday. Listen to what she said.

(BEGIN VIDEO CLIP)

SANDERS: This president, since he took office in the year and a half that he's been here, has created 700,000 new jobs for African- Americans. That's 700,000 African-Americans that are working now that weren't working when this president took place. When President Obama left after eight years in office, eight years in office, he had only created 800 -- 195,000 jobs for African-Americans. President Trump in his first year and a half has already tripled what President Obama did in eight years.

(END VIDEO CLIP)

HARLOW: No. That is not a fact. That is not true. She later corrected the record and apologized.

Here's the truth. President Obama created about 3 million jobs for African-Americans during his eight years in office. Advisers said, look, this was miscommunication. This is after Bloomberg pointed out the mistake.

Joining me now the man who did just that. Toluse Olorunnipa, White House reporter for Bloomberg News, broke the story. Josh Dawsey is here, our political analyst as well.

So you were listening to this, Toluse, and you thought what?

TOLUSE OLORUNNIPA, WHITE HOUSE REPORTER, BLOOMBERG NEWS: Yes. I just thought those numbers just sounded way off. Just sort of didn't really make a lot of sense that there would only be 195,000 jobs created for African-Americans under the eight years of the Obama administration when we saw more than 11 million jobs created across the country for all Americans.

HARLOW: Yes.

OLORUNNIPA: And the idea that President Trump had tripled that number and just came in and changed the entire situation for the African- American community within 18 months did not sound true so we looked back into the numbers and it was clear that Sarah Sanders misspoke. She was trying to defend herself against charges that the president may have said the "N" word. No one had asked her specifically about job numbers but she used that to try to defend this White House's record on African-American unemployment, and the numbers were just way off and it's a rare admission of a mistake.

We've seen Sarah Sanders make false statements from the podium multiple times. This is one of the rare times where she has tried to clean up the mistake because it was so far away from the truth.

HARLOW: And that's important, right? If you get it wrong, say you got it wrong. And she did that. Right?

So, Josh, when you look at the big picture conversation yesterday at the press briefing, it was largely about, you know, the "N" word and whether the president had uttered it and whether there is any tape. Here is an important question that she was asked on that in her response.

(BEGIN VIDEO CLIP)

SANDERS: I'm not going to get into the back and forth on who has signed an NDA here at the White House. I can tell you that it's common in a lot of places for employees to sign NDAs, including in government -- every administration prior to the Trump administration has had NDAs, particularly specific for anyone that had a security clearance.

(END VIDEO CLIP)

HARLOW: All right. Sorry. We played the wrong sound bite. So let's listen to the right sound bite where she's talking about whether she can guarantee or not that an "N" word was used by the president on a tape. Here is that.

(BEGIN VIDEO CLIP)

UNIDENTIFIED REPORTER: Can you stand at the podium and guarantee the American people they'll never hear Donald Trump utter the N word on a recording in any context?

SANDERS: I can't guarantee anything. But I can tell you that the president addressed this question directly. I can tell you that I've never heard it.

(END VIDEO CLIP)

HARLOW: All right. Josh, I mean, what's your read on how she answered that? Because, you know, some folks have been pointing out to me this morning, you might think that she would say something like, I would be stunned if he ever said that, that would never happen, it's not in his, you know, lexicon. What's your read?

JOSH DAWSEY, CNN POLITICAL ANALYST: Proof that he has said that. So far it's just the allegation from Omarosa Manigault Newman who said she's heard it second hand. You know, that said, I think Sarah Sanders has learned from the podium

not to ever promise or guarantee anything because this is quite an unpredictable president. He was on "The Apprentice" for, you know, a decade or so. Lots of tapes of him. You remember the "Access Hollywood" tape that came out? No one saw that one coming. So I think she's not going to make any promises or guarantees explicitly.

That said, I thought her defense yesterday was fairly remarkable. Questioned repeatedly about how the president continues to insult African-American folks like, you know, LeBron James and Don Lemon and Omarosa. Her -- she said he's not racist basically because he just insults everyone. And then she said, you know, he's actually said nastier things about other people. So, you know, faced with charges at the podium if the president was racist, Sarah said, not really, he just attacks everyone.

HARLOW: Yes.

DAWSEY: Which is kind of an interesting defense.

HARLOW: It was odd.

Turning to the NDAs, and we played the sound there from the White House basically saying these NDAs are totally normal, everyone signs them, nothing to see here.

[10:20:05] Toluse, when you -- when you look at, you know, who White House staffers are actually working for and being paid for, they're working for the American people, being paid salaries by the American taxpayer and yet, you know, there are these NDAs with multiple White House former press secretaries like Ari Fleischer in the Bush White House have pointed out, is not, you know, the norm.

OLORUNNIPA: Yes. And you had multiple legal scholars come out and say that these NDAs would be completely unconstitutional and against the idea of freedom of speech to have a government employee sign basically a loyalty oath saying that they will not --

HARLOW: Sure.

OLORUNNIPA: For perpetuity talk negatively about the president that they served under. These are administration officials who work for the taxpayers. They may work during a specific administration but they are not -- they are not required to pledge loyalty and to require themselves to never say anything negative about a particular president.

HARLOW: Yes.

OLORUNNIPA: So these NDAs are basically indicative of a presidency who is worried about loyalty, worried that people will reveal what's happening on the inside of the walls of the West Wing and clearly is afraid that if that stuff gets out, that it will reflect negatively on the president. So it's not likely that we'll see these NDAs enforced.

HARLOW: Yes. OLORUNNIPA: But they are creating a chilling effect for many people.

HARLOW: Well -- and that's an important point, right? Do they prevent other people from talking about what they've experienced.

Josh Dawsey, you have some interesting reporting about White House attorney Don McGahn and sort of how these -- all these NDAs actually happened and whether he even thought at the time that they were being signed that they would hold up in court at all.

DAWSEY: Right. Well, throughout his career President Trump has relied on the NDA for business contractors, folks who work with him. When he gave them to the White House, he demanded that new employees sign these NDAs. Essentially he was frustrated by the cascade of damaging leaks about his personal life, about what was going on in the White House, and he wanted these NDAs signed.

Don McGahn, his chief lawyer, said to him essentially, Mr. President, these aren't enforceable. We can't ask folks who are not -- if they're seeing classified info, that's one thing. But if were just seeing unclassified info to sign NDAs until the end of time. And the president said, no, I want people to sign them. So eventually after several weeks of wrangling Don McGahn told White House aides you have to sign these. But he also privately told folks these aren't enforceable, you just basically just have to sign them to appease the president.

And what the president said is that he wanted those out there basically -- not to scare people but to, you know, put fear in people, you're not going to disclose private things about me and you sign this document saying you wouldn't.

HARLOW: That's really bizarre. Like sign this but it doesn't actually mean anything. But just sign this.

All right. Josh, important reporting. Thank you. Toluse Olorunnipa, appreciate it, and again thank you for pointing out that important fact yesterday in your reporting.

Ahead, Vermont Democrats made history choosing the first transgender gubernatorial candidate for a major party in the country. What she says is driving Americans to the polls.

(COMMERCIAL BREAK)

[10:27:47] HARLOW: Democrats go for diversity. Vermont Democrat Christine Hallquist becoming the first transgender person to win a major party nomination for governor. Here she is this morning on CNN talking about President Trump's influence and causing the blue wave she sees ahead.

(BEGIN VIDEO CLIP)

CHRISTINE HALLQUIST (D), VERMONT GUBERNATORIAL NOMINEE: We are all reacting to what happened in 2016. You know, I'm hoping our children and our children's children will look back at 2018 and say that's when we made history. And we can be proud of our democracy because our democracy will have survived a despot.

(END VIDEO CLIP)

HARLOW: So on the Republican side, a telling result. Picks that the president supported won big last night.

Let's go to our Congressional Correspondent, Phil Mattingly with me to break it all down. So diversity really across the board for the Democrats last night. What did we learn?

PHIL MATTINGLY, CNN CONGRESSIONAL CORRESPONDENT: Yes, certainly punctuated last night but really, Poppy, if you just look over the course of primaries over the course of the last couple of months you've seen this pop on the women side, women candidates are coming out in droves and they are winning in droves.

If you look last night, obviously you have Christine Hallquist, but you also have running state wide for governor two other openly gay Democratic nominees, (INAUDIBLE) in Colorado, you have Lupe Valdez in Texas. It's like there has been a clear shift.

Now obviously there have been openly gay members of Congress, openly gay members of the Senate but at the governor level you haven't necessarily seen it up to this point. You also can go down, look at Ilhan Omar in Minnesota who's almost assured to win her seat after winning her primary last night.

The number of Muslim women in the United States House will go from zero currently to two. She'll join Rashida Tlaib who will like win in Michigan as well. Then you also have in Connecticut likely the first black woman to serve in the congressional delegation. Jahana Hayes, she came out on top in the primary last night. So if you look across the Democratic Party there's been a clear move towards diversity in the races that we've seen up to this point. How will that play in November? We'll still have to see but there's no question throughout the primaries, Poppy, it has been real and it has been substantive when it comes to victories.

HARLOW: And what about the industrial Midwest? The blue wall? You know, what has been so critical for President Trump with Wisconsin, and then maybe Minnesota flip maybe in 2020. I mean, what did last night in those two states tell us big picture?

MATTINGLY: Yes. I think if you look at Minnesota you look at Wisconsin, these are probably two of the most fascinating political states. With Wisconsin you have a very important Republican primary. Leah Vukmir for the United States Senate, beating Kevin Nicholson which is a big win because she was backed by the establishment.